Venture capital improvements

08 May 2007

The Government will further relax the eligibility requirements for concessional taxation treatment for foreign residents investing in venture capital limited partnerships and Australian venture capital funds of funds, with effect from the 2007-08 income year.

The concessional tax treatment for foreign resident investors will be extended:- to allow up to 20% of committed capital in venture capital limited partnerships and Australian venture capital funds of funds to be invested in companies and unit trusts that are not located in Australia; and- to allow eligible partners in conditionally registered venture capital limited partnerships and Australian venture capital funds of funds that become fully registered to be entitled to a tax exemption on the profits and gains derived from investments made while the partnership was conditionally registered.

To ensure that investments made by an early stage venture capital limited partnership are directed at early stage venture capital activities, a partnership can acquire pre-owned investments in an entity only if:- it already owns an investment in the entity, or it will also be making investments, that are not pre owned investments in the entity at the same time; and- the total value of the partnership’s pre owned investments does not exceed 20% of its committed capital.